ZTO looks to ex­pand af­ter IPO

Ex­press de­liv­ery ser­vices com­pany will buy more trucks, land af­ter NYSE debut

China Daily (USA) - - ACROSS AMERICA - By HONG XIAO in New York xi­ao­hong@chi­nadai­lyusa.com

Shares of ZTO Ex­press Inc (NYSE: ZTO), a Chi­nese ex­press de­liv­ery ser­vices provider, de­buted on the New York Stock Ex­change on Thurs­day but fell from their ini­tial pub­lic of­fer­ing price.

The stock opened at $18.40, $1.10 be­low its IPO price of $19.50, and closed al­most $3 lower at $16.57.

“Up and down is nor­mal; we’re bet­ter to not fo­cus too much on a sin­gle mo­ment,” Lai Meisong, chair­man of ZTO, said about the stock’s first-day per­for­mance.

“I be­lieve in the qual­ity of ZTO; it would def­i­nitely pay back to the share­hold­ers sooner or later,” Lai said firmly.

Founded in 2002, the Shang­hai-based com­pany is now a lead­ing ex­press de­liv­ery com­pany in China and one of the largest of its kind glob­ally in to­tal par­cel vol­ume in 2015, ac­cord­ing to the iRe­search Re­port.

ZTO has demon­strated the fastest growth rate among the top five Chi­nese ex­press de­liv­ery com­pa­nies as of Dec 31, with its an­nual par­cel vol­ume grow­ing at a com­pounded an­nual growth rate of 80.3 per­cent be­tween 2011 and 2015, dur­ing which it recorded con­sec­u­tive an­nual in­creases in mar­ket share.

The com­pany mainly de­liv­ers parcels for busi­nesses, in­clud­ing e-com­merce giants Alibaba Group Hold­ing Ltd and JD.com Inc. Alibaba ac­counted for 75 per­cent of ZTO’s busi­ness dur­ing the first half of the year.

ZTO raised $1.4 bil­lion by sell­ing 72.1 mil­lion Amer­i­can de­posi­tary shares at $19.50 apiece, af­ter of­fer­ing them for $16.50 to $18.50 each.

In its IPO fil­ing, the com­pany said it gen­er­ated rev­enue of $638.8 mil­lion last year and had a net profit of $115 mil­lion, with a profit mar­gin of 18 per­cent.

With more than 23,000 branches and 74 op­er­a­tions cen­ters na­tion­wide, ZTO Ex­press has as­sets worth $1.77 bil­lion with li­a­bil­i­ties of $412 mil­lion.

It had a mar­ket share of 14.3 per­cent in China last year.

ZTO do­mes­tic ri­vals STO Ex­press and YTO Ex­press have un­veiled plans to go pub­lic through re­verse merg­ers, while the coun­try’s big­gest player, SF Ex­press, re­ceived con­di­tional ap­proval to list in a sim­i­lar way in Shen­zhen.

Lai said list­ing on the NYSE in­stead of a do­mes­tic stock ex­change will cre­ate more brand aware­ness for ZTO over­seas, a plus for the de­vel­op­ment of cross-bor­der and in­ter­na­tional busi­ness, and help ZTO build a so­phis­ti­cated in­vestor base.

“We also want to take ad­van­tage of this op­por­tu­nity to show­case the ad­vanced de­vel­op­ment model of Chi­nese ex­press de­liv­ery and its mar­ket,” Lai added.

He said ZTO will use the IPO pro­ceeds to buy more trucks, ex­pand ca­pac­ity through the pur­chase of land, fa­cil­i­ties and equip­ment, and for gen­eral cor­po­rate pur­poses.

“We would in­crease the pro­duc­tiv­ity con­struc­tion. The out­look of China’s ex­press in­dus­try is pretty good, which will have a mid­dle-high speed growth pe­riod in the fu­ture,” Lai pre­dicted.

HONG XIAO / CHINA DAILY

Chi­nese ex­press de­liv­ery ser­vices provider ZTO Ex­press Inc (NYSE: ZTO) makes its trad­ing debut on Thurs­day at the New York Stock Ex­change.

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